Correlation Between Niko Semiconductor and K Way

Can any of the company-specific risk be diversified away by investing in both Niko Semiconductor and K Way at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Niko Semiconductor and K Way into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Niko Semiconductor Co and K Way Information, you can compare the effects of market volatilities on Niko Semiconductor and K Way and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Niko Semiconductor with a short position of K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niko Semiconductor and K Way.

Diversification Opportunities for Niko Semiconductor and K Way

0.26

Correlation Coefficient

Niko Semiconductor  K Way

Modest diversification

The 3 months correlation between Niko and 5201 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Niko Semiconductor Co and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Niko Semiconductor is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Niko Semiconductor Co are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Niko Semiconductor i.e., Niko Semiconductor and K Way go up and down completely randomly.

Pair Corralation between Niko Semiconductor and K Way

Assuming the 90 days trading horizon Niko Semiconductor Co is expected to under-perform the K Way. But the stock apears to be less risky and, when comparing its historical volatility, Niko Semiconductor Co is 1.96 times less risky than K Way. The stock trades about -0.05 of its potential returns per unit of risk. The K Way Information is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,840  in K Way Information on December 29, 2024 and sell it today you would earn a total of  695.00  from holding K Way Information or generate 24.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Niko Semiconductor Co  vs.  K Way Information

Niko Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Niko Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Niko Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

K Way Information

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, K Way showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Niko Semiconductor and K Way

The main advantage of trading using opposite Niko Semiconductor and K Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niko Semiconductor position performs unexpectedly, K Way can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in K Way will offset losses from the drop in K Way's long position.

The idea behind Niko Semiconductor Co and K Way Information pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.